While very few mining companies are implementing new projects as they struggle to navigate a volatile commodities market, zinc miner Vedanta Zinc International is developing its Gamsberg zinc project, in the Northern Cape.

Vedanta CEO Deshnee Naidoo says the company has been able to weather the difficult economic environment better than many of its peers because of its lean corporate structure and an entrenched corporate culture that values entrepreneurship and innovation.

Speakers at financial consultant EY’s Mining and Metals Industry Forum, which was held in July, highlighted the need for businesses in the mining sector to use innovative strategies to navigate volatility in the mining market. Chamber of Mines of South Africa CEO Roger Baxter predicted that commodity prices would remain low for the next four to five years, while EY global mining and metals advisory leader Paul Mitchell stressed that the only way to manage this was for mining businesses to focus on improving productivity and reducing costs by moving from conventional to modernised forms of mining.

EY advisory manager Thabi Masela emphasised that such a move would require innovation in more than just technology, pointing out that a redesign of the working environment and a shift in corporate culture were imperative for mining companies to manage uncertainty in the current market.

Naidoo tells Mining Weekly that Vedanta’s key strategy has been to drive a culture of cost saving: “Our main focus has been on improving free cash flow. A consistent message I reinforced across the business was that, if we couldn’t ensure free cash flow, we couldn’t invest in new projects and, if we couldn’t do this, then the future of the business couldn’t be guaranteed.”

She points out that, as a highly decentralised organisation, Vedanta has an operating model in place to implement decisions quickly in response to changes in the market. She further emphasises that an inclusive approach is used to encourage Vedanta’s employees to cooperate with business decisions.

One strategy that has been implemented involves the setting of weekly targets for each of the company’s business units, which Naidoo personally follows up on. “This kind of monitoring of the numbers is a powerful motivator and, in addition, I have introduced various reward schemes for employees who come up with innovative ideas.”

She highlights that generating solutions to challenges the company faces has, thus, allowed for an inclusive culture, in which everyone can participate and take responsibility, rather than it just being the domain of top management.

Uniting employees to meet the business’s overall goals in this way has also resulted in sound cooperation with labour unions. “Not everyone can say that they have been able to maintain such good relationships with unions. Neither I nor any of the management team has taken a salary increase this year. This is the kind of commitment you want from your top management and it’s important to drive that culture in a business.”

Gamsberg Project
Naidoo believes that this approach to business has enabled Vedanta to take advantage of opportunities in the zinc market and develop its Gamsberg project in a difficult economic climate.

While most other mining commodities are in oversupply, zinc is in short supply and has, thus, recovered more quickly from the commodities downturn, compared with minerals like copper and aluminium. “Unlike other commodities, the zinc market is primarily being driven by supply constraints and less so by demand and, thus, it is relatively stable at the moment,” Naidoo elaborates.

The project consists of a four-million- ton-a-year run-of-mine openpit zinc mine, with a reserve of 53-million tons and a defined ore resource of 130-million tons at Gamsberg North, as well as a concentrator plant and associated infrastructure. Vedanta initiated prestart activities in July 2015, such as building an access ramp and implementing a V-cut that will allow for access to the orebody. The company will place the order for the project’s processing plant by the end of this month and expects the mine to produce ore by early 2018.

Gamsberg is a greenfield project and Vedanta is going to great lengths to ensure the protection of biodiversity in the area. “Often, on projects of this nature, people need to be relocated but, in this case, workers need to be brought in and vegetation [needs to be] relocated,” says Naidoo.

To date, Vedanta has overseen the extraction of more than 80 000 plants from the mining site. These plants have been put into nurseries while the company completes the acquisition of land where they will be replanted to replicate the original biodiversity of the Gamsberg area.

The socioeconomic management of the area is also a key concern. Naidoo notes that the mine is in a very remote location, with a small community of about 3 000 people, most of whom are employed either directly or indirectly by the mine. She highlights that, with an additional 1 000 people set to work on the project, various factors will need to be considered to support the growing population.

Vedanta has received a pleasing level of support from local government in the Northern Cape in this regard. The Premier’s office has committed to partnering with the company to develop some of the additional infrastructure needed, expressing its eagerness to help cultivate a long-term socioeconomic strategy for the Northern Cape province, Naidoo explains.

The Northern Cape is renowned for its many small towns that have been abandoned once mining projects have come to an end, she notes. The company is considering the development of a broader regional strategy so that infrastructural developments will benefit more than just the immediate area surrounding the Gamsberg project, Naidoo concludes.